The number of people who applied for non-compliant, short-term health insurance policies — known as gap plans — rose by more than 100 percent in 2014, despite the government's intention to upgrade people's coverage through the Patient Protection and Affordable Care Act, according to Reuters.
Gap plans provide low-cost coverage for major medical events with high deductibles and out-of-pocket costs. They can deny applicants based on pre-existing conditions and do not offer the same breadth of protections offered by health plans under the PPACA, such as preventive care or maternity coverage. A typical policy costs around $100 a month.
The government does not consider gap plans as qualifying healthcare coverage, so people who have them are subject to the same penalties as the uninsured.
However, short-term carriers have reported substantially higher rates of applicants in 2014. Short-term plan signups at eHealth reached 140,000 in 2014, up 134 percent from 60,000 in 2013. According to the report, Agile Health Insurance, a subsidiary of Health Insurance Innovations, said new policies rose 100 percent from 2013 to 2014, and are up again so far in 2015.
The main reason for the spike in these short-term gap plans is large numbers of people who missed the open enrollment period for a health plan under the PPACA, according to Reuters. Nate Purpura, eHealth's director of public relations and content, said many of these people missed open enrollment because of poor communication between consumers, the government and insurance companies. Since this population of the uninsured has to wait until the next open enrollment period to obtain coverage, they are turning to these short-term plans to bridge the gap.
Both eHealth and Agile have reported increased signups from retirees who are seeking low-cost coverage until they reach age 65 and are qualified for Medicare. The age range of 55 to 64 now accounts for 9 percent of the gap plan market at eHealth. However, the largest population seeking gap plans is young, healthy people looking for low-cost catastrophic coverage. According to Reuters, those ages 18 to 34 represent 57 percent of eHealth's buyers.